Monday’s bond market has opened in positive territory following weaker than expected manufacturing data. The stock markets are starting the week with noticeable gains, pushing the Dow higher by 91 points and the Nasdaq up 17 points. The bond market is currently up 5/32 (2.12%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Friday’s early pricing.
This morning’s economic data came from the Commerce Department who posted May’s Durable Goods Orders report. It showed a 1.1% decline in new orders for big-ticket products such as appliances and airplanes. This was a larger drop than the 0.5% that was forecasted, indicating a softening manufacturing sector. However, this is not a wide variance for this data. This report is known to be quite volatile, so while the 0.6% difference would be highly noted in many releases, it is not big news for this one. Still, we can consider the data slightly positive for bonds and mortgage rates.
The rest of the week brings us the release of four more economic reports that may influence mortgage rates along with two Treasury auctions. Some of these reports certainly can cause a change in mortgage rates, but none are considered to be key releases. There are also several Fed-member speaking engagements taking place, including Fed Chair Janet Yellen’s appearance in London tomorrow afternoon. None of them are expected to draw a significant amount of attention, although their words are always of interest to the markets.
June's Consumer Confidence Index (CCI) will be posted late tomorrow morning. This data is relevant to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future, fueling economic growth. If it shows a sizable increase in confidence from last month, we can expect to see a negative reaction in bonds and mortgage rates. Current forecasts are calling for a reading of 116.7, down from last month's 117.9 reading. The lower the reading, the better the news it is for bonds and mortgage rates.
Also tomorrow is the first of this week’s two Treasury auctions that we will be watching as they could affect mortgage rates. These sales may influence broader bond trading enough to influence mortgage rates slightly if they show overly strong or weak investor demand. 5-year Notes are being sold tomorrow while 7-year Notes go Thursday. If they are met with a strong demand, we could see bond prices rise during afternoon trading. This could lead to afternoon improvements to mortgage rates also. On the other hand, if the sales draw a lackluster interest from investors, mortgage rates may move slightly higher during afternoon trading these days.
Overall, the most active day for mortgage rates could end up being any of them this week. The single most important report was today’s Durable Goods Orders but tomorrow and Friday are potential active days also. The best candidates for least active day are Wednesday and Thursday. Despite the lack of an event that is expected to be a market mover, we still could see mortgage rates make a noticeable move this week. Therefore, please maintain contact with your mortgage professional if closing soon and still floating an interest rate.